In this article I shall take from the Litigators Toolbox the term “without prejudice,” which is often employed inappropriately.
The without prejudice rule provides an umbrella under which persons involved in a dispute can negotiate without fear of their communications being revealed to the Court. As such, disputants can make admissions or offers to settle without being bound by them if their talks fail to reach a settlement. The policy behind the rule was described in Cutts v. Head ([1984] Ch 290) where Oliver L.J. said that parties should be “encouraged fully and frankly to put their cards on the table”. This should be done by “preventing statements or offers” being brought before “the Court as admissions on the question of liability and / or quantum.”
The influence of public policy on encouraging persons to settle their disputes without resorting to litigation, is an important factor in the without prejudice rule as is the contractual element of the Rule.
The objective is therefore, to allow disputants to negotiate their disputes in an atmosphere of trust. The implied contract aspect of the rule is the parties’ agreement not to disclose admissions or other matters arising during the negotiations, to the Court. Communications between parties which are “without prejudice,” are generally inadmissible as evidence in court and cannot be made the subject of a disclosure order in any proceedings.
The support for litigants being able to properly engage in settlement negotiations was illustrated by the case of Suh v Mace (UK) Ltd. (SUH v Mace (UK) Ltd [2016] EWCA C. V4.) The Plaintiffs were commercial tenants who sued the landlords for unlawful forfeiture. An issue arose regarding the admissibility of two communications ons between the Plaintiffs and the Defendant landlord’s solicitor (Ms. Jackson). The Defendant sought to adduce notes of meetings in evidence because they contained admissions by Mrs. Suh that there was unpaid rent. The landlord succeeded at first instance, however, the Court of Appeal took a different view. The Court of Appeal held that “the only sensible purpose for such a meeting must have been to seek some kind of solution to the litigation. That is what a settlement is.” Because Mrs. Suh had been ignorant of any potential privilege, and hence could not have acted to positively or negatively affect the privilege, her appeal was allowed. Vos LJ declared all privileged communications inadmissible. This decision could be simply explained and understood in the context of the public policy aspect of the umbrella, namely to reduce costs and legal me by permitting parties to properly engage in negotiations without fear of any admissions being disclosed to the court.
For a document to be inadmissible on the ground that it is without prejudice, it must form part of a genuine attempt to resolve a dispute. There are two elements which need to be apparent, namely: (1) a genuine dispute to be resolved and (2) a genuine a empt to resolve it.
Once a party has made a without prejudice offer, the privilege will attach not only to the offer, but to the response; whether or not it includes a counter offer, whether it is a mere request for information, whether it is simply an outright rejection without any further attempt to settle.
It is not all plain sailing. As with every rule of law, the Without Prejudice Rule has its exceptions. The case of Ofulue (Ofulue v. Bossert [2009] 3 All ER 93.) is one in which communications were rendered admissible in evidence. In that case, Lord Hope stated that: “the court should be slow to lift the umbrella (of the without prejudice protection) unless the case for doing so is absolutely plain”. In the same case Lord Walker stated “As a matter of principle I would not restrict the without prejudice rule unless justice clearly demands it”.
Any commentary on the without prejudice rule would not be complete without mentioning the role which costs play both in litigation and also in negotiations. In the case of Walker (Walker v. Wilsher [1889] 23 QBD 335 (CA)), the Court of Appeal held that without prejudice communications could not form part of the court’s costs considerations. However, the Court of Appeal suggested it would be permissible in a case which changed this situation and gave rise to the well-known “Calderbank offer”. In Calderbank (Calderbank v. Calderbank [1976] FAM 93 (CA)), it became permissible for a party to reserve the question of costs in a without prejudice offer. From this, the practice of writing “without prejudice save as to costs” arose such that negotiations which have taken place expressly on a without prejudice save as to costs basis, are admissible on the question of costs as an exception to the general rule which precludes the admission of without prejudice. As a result, Calderbank offers can be a useful tool to settle a dispute and can sometimes provide a more suitable alternative to other methods of dispute resolution.
When entering into negotiations to settle a dispute, the without prejudice umbrella is an extremely useful aid, but must be employed carefully, otherwise the documents or other materials may lose the protection of the rule and become admissible in court.
There will doubtless be further development of the without prejudice rule and refinements in future cases. As matters stand, when properly deployed, the rule is a useful tool to facilitate negotiations and obviate recourse to protracted litigation.
ABOUT THE AUTHOR
Philip Boni is Of Counsel with the firm and has almost 40 years of civil litigation experience with a concentration on Banking, Employment, confidentiality matters, and Law of Trusts.
*Article first published in TerraLex Connections, May 2018
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